FX Play of the Day: Long AUD/USD Setup Ahead of RBA’s Decision

A brand new month means we get to see major central banks updating their monetary policies!

The Reserve Bank of Australia (RBA) will get the ball rolling on Tuesday at 4:30 am GMT.

Will the decision help extend AUD/USD’s uptrend this week?

AUD/USD 15-min Forex Chart by TV

In case you missed it, AUD/USD has been making higher highs and higher lows since Thursday when the pair found support from the .6600 psychological area.

AUD/USD is now trading closer to the .6640 area, which lines up with today’s Pivot Point line.

More importantly, its current levels are also close to the trend line and 100 SMA support on the 15-minute time frame.

Can AUD/USD extend its short-term uptrend?

It will likely depend on the RBA’s decision.

Markets see the central bank keeping its rates steady at 4.10% after surprising markets with 25 basis-point rate hikes in May AND in June.

BUT.

Some traders believe that Governor Lowe and his team and his gang could raise their interest rates by another 25bps to 4.35%.

For one thing, June’s statement said that “further tightening of monetary policy may be required,” something that was also in the May statement before RBA surprised us with a June rate hike.

Leading indicators, such as the S&P manufacturing PMI, MI inflation expectations, and the unemployment rate hint that the economy can also take at least another rate hike.

If RBA surprises us with another 25bps hike, then AUD/USD could jump from its trend line support levels.

AUD/USD could rise to its .6670 previous highs and even attempt for the R1 (.6680) before the sellers step in.

If you aren’t sure about buying AUD/USD, then you can also wait for the actual event and trade the actual release.

Just remember to take profits during the Asian or London session trading to make sure you don’t get stopped out by other market catalysts!

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.